Petroleo Brasileiro SA, as the firm is formally known,
announced late on Thursday that it will raise gasoline prices 3
percent and diesel 5 percent at the refinery gate as of midnight
(0200 GMT) on Friday.

Analysts considered the increase insufficient to make up for
recent losses in Petrobras' refining division, which is often
forced to import fuels and sell them at a loss in the domestic
market. Investors expected gasoline prices to rise at least 5
percent.

Petrobras preferred shares initially gained more than 1
percent on the Sao Paulo stock exchange. They quickly erased
those gains to drop 2.35 percent at 10:35 a.m. local time (1235
GMT).
(Reporting by Walter Brandimarte Editing by W Simon)